Guaranteed lifetime income.
What a simple concept to embrace. But one that Americans haven’t historically had access to.
Fortunately, times are changing. And so are retirement plans.
A recent story in the Wall Street Journal highlighted how retirement plan providers, including TIAA, are helping to expand access to annuities in 401(k) plans. This game-changing enhancement gives employees the opportunity to secure guaranteed retirement income for life.
This sea change in retirement plans can largely be attributed to the SECURE Act, which was signed into law in December 2019. Strongly supported by life insurers, financial service providers, plan sponsors, and participant groups, the SECURE Act contains several provisions designed to improve American workers’ financial security. Specifically, by making it easier for employers to offer an in-plan annuity option to their employees.
Before the SECURE Act, employers that wanted to include annuities in their retirement plans first had to independently evaluate a life insurer’s financial strength. For many employers, this was a barrier to including annuity options in their plans.
But thanks to the SECURE Act, employers can now rely, in part, on the role state insurance regulators play to ensure a life insurer’s financial strength.
The appeal of guaranteed lifetime income continues to grow. In 2021, annuity sales rose 16%. And no wonder. Like a traditional pension, an annuity can provide retirees with a steady guaranteed income stream for the rest of their lives.
No other product can provide financial serenity like annuities. That is one reason why lawmakers in the U.S. Congress are considering additional measures that make it easier to annuitize and provide greater flexibility when doing so. Provisions within the Securing a Strong Retirement Act of 2021 and the Retirement Security and Savings Act would remove obstacles so annuities could be more available, and would enhance rules surrounding qualified longevity annuity contracts, and make certain that spousal survival rights are protected.
Like the SECURE Act, these provisions make sense. They will help more Americans get what they deserve: peace of mind through guaranteed lifetime income in retirement.
Now that’s a concept worth embracing.
Howard Bard is Senior Vice President and Deputy General Counsel with the American Council of Life Insurers (ACLI). Howard reports directly to the General Counsel with responsibility for supporting the legal needs of the organization. He also helps guide ACLI policy on regulation and legislation affecting the retirement security business of its members.
